Well, some have to learn the hard way.
Reuters) – Caterpillar Inc uncovered “deliberate, multi-year, coordinated accounting misconduct” at a subsidiary of a Chinese company it acquired last summer, ……Shares of Caterpillar fell 1.5 percent in afterhours trading following news of the fraud, …..
Caterpillar, the world’s largest maker of tractors and excavators, said on Friday it would take a noncash goodwill impairment charge of $580 million, or 87 cents per share, in the quarter.
Analysts had expected the company to report $1.70 per share when it reports its results on January 28, according to Thomson Reuters I/B/E/S. ….
A member of the Caterpillar board during the course of the Siwei deal told Reuters the board was distracted at the time by a larger transaction and paid relatively little attention to the Siwei acquisition.
While Siwei was not U.S.-listed, the broader accounting question has been a thorny one for U.S. companies looking to grow their business in China.
Well, maybe it was stupidity on Caterpillar’s part, maybe there was some underhanded dealings. Chinese companies are notorious for poor accounting practices. There’s lots of reasons for this. Companies should take extra care when purchasing Chinese companies.